FL Supreme Court Finds No Exactions Taking Where Permit Was Never Issued

In 1994, Koontz sought a permit from the St. Johns River Water Management District to develop 3.7 acres of his commercial land, 3.4 acres of which were designated as wetlands. St. Johns initially agreed to recommend approval of the permit on the condition that Koontz agree to conservation and mitigation measures, either by deeding the remainder of his property to conservation and performing drainage work on other property or by reducing the amount of wetlands he planned to develop and turning the remaining wetlands into conservation areas. Koontz would not agree to the stipulations and St. Johns denied the permit.

Koontz brought an inverse condemnation claim in 1998, arguing that St. Johns had imposed an improper exaction in violation of the takings standards laid out in Nollan v. California Coastal Commission, 483 U.S. 825 (1987) and Dolan v. City of Tigard, 512 U.S. 374 (1994). The issues in Koontz’s case reached the Fifth District Court of Appeal four times, with courts ultimately determining that a taking had occurred and requiring that St. Johns take one of three actions: issue the permit; compensate Koontz for the taking; or modify its conditions to avoid a taking. St. Johns issued the permits after Koontz demonstrated his property contained a smaller portion of wetlands than originally thought. A circuit court then awarded $376,154 in damages to Koontz for the temporary taking of his property by St. Johns.

In St. Johns River Water Management Dist. v. Koontz, 5 So.3d 8 (Fla. 5th DCA 2009) (Koontz IV), St. Johns appealed the damage award, asserting that there had been no exaction because “nothing had been taken from Mr. Koontz,” and that the elements of an inverse condemnation had not been satisfied because the permit had been denied – St. Johns had not ultimately required any physical dedication of land because the permit negotiations involving the proposed dedication had failed. Despite these arguments, the Fifth Circuit affirmed the judgments in favor of Koontz and St. Johns filed a motion for certification of the case’s central question as one of great public importance.

In this case, the Supreme Court of Florida addressed the certified question on the applicability of the Nollan/Dolan regulatory takings rules to circumstances where the government had denied the permit sought. The question the court sought to reach was whether the Fifth Amendment recognized an exactions taking under Nollan/Dolan “where there is no compelled dedication of any interest in real property to public use and the alleged exaction is a non land use monetary condition for permit approval which never occurs and no permit is ever issued.” After examining at length the Supreme Court’s takings jurisprudence, the court concluded that the Nollan/Dolan standard applied in cases where government entities had issued a permit. However, the court declined to extend the Nollan/Dolan doctrine to situations where a permit was never issued and the exactions never implemented. The court stated that Nollan/Dolan will only apply “where the condition/exaction sought by the government involves a dedication of or over the owner’s interest in real property in exchange for permit approval; and only when the regulatory agency actually issues the permit sought, thereby rendering the owner’s interest in the real property subject to the dedication imposed.”

Since St. Johns never issued the permit to Koontz, and Koontz never undertook performance of the mitigation suggested by St. Johns, the court held that Nollan/Dolan had been erroneously applied and a taking had not occurred. Public policy also weighed in favor of this interpretation, according to the court, because finding a taking even where a permit was denied would unduly restrict government agencies’ land use regulation abilities by dramatically increasing the threat of costly litigation.

The Florida Supreme Court answered the certified question in the negative, quashed the Fifth District Court of Appeal decision in Koontz IV, and remanded the case for further proceedings.

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